Pernia: Proposed tax reform not anti-poor

CEBU, Philippines - The government's proposed tax reform is not anti-poor, according to Socioeconomic Planning Chief Ernesto Pernia, as it is projected to further strengthen the country's economic growth.

"The reform will strengthen economic growth further. It will also generated half a million of jobs. Its impact on inflation is only one half of one percentage point in the first year of implementation. But it will dissipate over time and gradually go down," Pernia recently said.

The country's economic chief stressed the tax reform program is really imperative considering that the country's last tax reform was 20 years ago.

"By now our tax rates are really outdated and not adjusted to inflation. It's really imperative to reform the tax system to make it more efficient and more competitive across Asian countries and more progressive in terms of benefiting those with lesser in life," Pernia explained.

The Tax Reform for Acceleration and Inclusion Act (TRAIN), the first package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), was approved by an overwhelming majority of the House of Representatives as House Bill No. 5636 last May 31 and is now under the Senate's consideration.

It is designed to make the tax system more “equitable, progressive and efficient” and fulfill President Duterte's 10-point socioeconomic reform agenda and keep the Philippines fiscally stable.

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HB 5636 and Senate Bill 1408, the tax reform bill filed by Senate President Aquilino Pimentel III, both aim to significantly lower personal income tax rates by making the first P250,000 in income of compensation earners tax exempt.

Those earning below P250,000 will be tax exempt.

Pernia believes "everybody will benefit from this new tax policy."

He said the reform also promotes progressive taxation which taxes more those who are earning more.

Both bills also contain revenue-enhancing provisions such as broadening the value-added tax (VAT) base, and adjusting the excise taxes on fuel and automobiles, among other measures.

The version of the TRAIN approved by the House is a consolidation of HB 4774–-the original bill endorsed by the Department of Finance (DOF) and authored by Quirino Rep. Dakila Carlo Cua –with 54 other tax-related measures.

President Duterte has certified the TRAIN as an urgent and priority measure while the executive committee of the Legislative-Executive Development Advisory Council (LEDAC) has included the bill in its priority list that it wants approved before the year's end.

The tax reform package also has gotten the support of the country’s local and foreign business chambers, domestic and multilateral financial institutions, civil society groups, health advocates, and economic advocacy groups.

Pernia said what is usually not appreciated is that the tax reform package is crucial to the fulfillment of the administration's massive infrastructure build-up nationwide. (FREEMAN)